Following a three-week forced shutdown caused by a financial crisis, Greek banks finally reopened their branches across the country on Monday. However, transaction restrictions on cash withdrawals are still in effect.
The reopening of the Greek banks came after a new deal of bailout reforms was agreed. Greece is also in the process of paying off billions of euros owed to international creditors. Unfortunately, the stock market remained closed until further notice.
Earlier this month, Greece was on the edge of leaving the euro because of the crisis that possibly destabilized the foundations of the single European currency. But due to Prime Minister Alexis Tsipras' reluctant acceptance of a tough deal of bailout demands from European partners, bank closures were finally discontinued.
Under the bailout terms approved by the Greek parliament on Jul. 16, value added tax will increase, with VAT on food and public transport jumping from 13 percent from 23 percent. According to Irish Independent, the parliament also agreed to broad reforms in the pension system including a gradual phasing out of all early retirement options.
As the Greek banks reopened after the decree on Saturday, the authorities kept the daily cash withdrawal limit at €60 but added a weekly limit at €420. Bank customers are still not able to cash cheques instead they'll deposit them into their accounts. Though they can make purchases abroad by using credit and cash cards, they are not able to get cash. Restrictions on opening new accounts or activating dormant ones are also in effect, Reuters noted.
"Capital controls and restrictions on withdrawals will remain in place but we are entering a new stage which we all hope will be one of normality," Greek Bank Association Head Louka Katseli said.
The new bailout reforms, which are tougher than those rejected in a referendum earlier in July, came on the same day Greece's coalition government swore in its new, reshuffled cabinet. It also pushes back, by a month, the deadline of filing for income tax returns on August 26.
Moreover, it includes tax hikes, pension cuts, strict curbs on public spending, an overhaul of collective bargaining rules and a transfer of €50 billion of state assets into a special privatization fund.
Since Greek banks have reopened, Athens instigated measures to pay €4.2 billion in debt to the European Central Bank due on Monday as well as the €2.05 billion in arrears to the International Monetary Fund after Greece became the first advanced economy to default on a loan to the IMF. It has initiated procedures to pay €500 million owed to the Bank of Greece, Financial Review reported.
Meanwhile, minor disruptions are expected after the extended interruption to services. However, services will resume largely as normal after Greek banks reopened.
